Process digitalization for efficiency and innovation in banking

Ever since new challengers such as N26 and Fidor Bank have successfully entered the banking market and are recording increasing number of users, it has become clear that traditional banks will only survive the fast-paced change in the financial services sector if they are able to reinvent their service and product offerings as well as their processes. The standard product portfolio, basic online banking applications and an extensive branch network are not going to attract young, digitally minded customers.

What truly makes a difference is a broad, digitally available and cost-efficient offering that seamlessly follows the customer journey, individual needs and cash-flow requirements, which is accessible at all times. This applies to both retail and corporate banking.

In addition to the pressure of increasing customer expectations, banks are still managing the adverse effects of the financial crisis and the low-interest rates environment. Many banks focus on cost optimization as the main lever to drive down high cost-income ratios. Specifically, the processes in middle and back offices are still suffering from various manual tasks, interfaces and historically grown process variants. The automation of tasks like market conformity verification, clearing/settlement and the entire credit and trading processes are important areas for the achievement of end-to-end digitalization.
As an additional major challenge, banks are confronted by constantly expanding regulatory requirements in terms of scope and complexity.

As a result, the need for action within these aforementioned areas and the prioritization and allocation of resources and budgets highlight the challenging and contradicting objectives between digitalization, cost reduction and regulatory initiatives.
Implementing an adequate process digitalization solves this conflict by targeting and developing all three areas (digitalization, cost efficiency, and adherence to regulatory requirements) in parallel, thereby creating the preconditions for greater customer loyalty.

The solution for process digitalization presented here provides an adaptable framework, which allows the structural embedding of standardized approaches for the digital transformation of processes within a bank. Furthermore, it resolves the aforementioned conflict between chances and obstacles of digitalization. Rather it creates the prerequisite to identify digital customer experiences, opens opportunities for cooperation or cocreation with FinTechs and ensures the important methodological and procedural knowhow transfer.